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Local startup business finds success in crowd funding

When Amanda Nicolet, of Augusta, needed money to market a line of salt and spice blends she had created, she turned to the Internet. She posted on Kickstarter, a crowd-funding Web site where people can invest in various ventures. Nicolet, who is expecting her third child, said she and her husband have backed several projects, mostly food-related, on Kickstarter.

In less than two weeks, Nicolet received about $1,400 from people on Kickstarter who wanted to invest in her specially created spice blends.

Amanda Nicolet holds out a small packet with her most recent specially created salt and spice blend, called "Preggo Waddle." Nicolet said she likes coming up with fun names for her blends.

What started out as a kitchen project for Amanda Nicolet quickly turned into a budding business venture for the soon-to-be mother of three.

In an effort to satisfy her husband’s affinity for hot, salty foods, Nicolet began experimenting in the kitchen about three weeks ago, creating a batch of finishing salt-and-spice blends. The line was such a hit with family and friends that Nicolet thought about testing the market to see whether others would find the spices just as savory.

When it came to raising money for the business, though, Nicolet chose to go a nontraditional route by turning to the Internet.

The Augusta resident posted her project on Kickstarter, a “crowd-funding” Web site launched in 2009 that provides an open forum for creative types and entrepreneurs seeking online funding for their ideas.

“My husband found Kickstarter a month or two ago,” said Nicolet, who is 39 weeks pregnant with their third son. “He really fell in love with the platform of seeing all these cool projects that people have launched. I thought, “Why don’t I try something like that? If I get a really good response from this initial small-batch production, then I can try to take it large-scale.’”

In less than two weeks on Kickstarter, Nicolet has already amassed almost $1,400 from 26 people backing her project, exceeding her initial fundraising goal of $775. Of those backers, 10 people pledged $75 or more and one gave at least $100.

Nicolet expanded her line to include 10 spices because of the online popularity. For those donating $7 or more, Nicolet has promised to send samples of her product in amounts based on the money pledged.

Kickstarter is just one of hundreds of online platforms aimed at fundraising efforts for innovative projects, social causes, artistic endeavors and other enterprises.

Sites including Kickstarter, Indiegogo, GoFundMe and PeerBackers could become even more popular for startup and small- business owners after Congress passed the Jumpstart Our Business Startups Act last year, said Dr. Anthony Robinson, who teaches entrepreneurship, marketing and strategic management in the Hull College of Business at Georgia Regents University.

The act would mean entrepreneurs raising less than $1 million a year through crowd funding would face less federal regulation, Robinson said. The act remains in limbo until the Securities and Exchange Commission implements it.

“That’s how we’re going to get out of the economic slump,” Robinson said. “That’s why you see this kind of legislation that is helping to facilitate crowd funding.

“Those things lead to more invitation in the community. It will hopefully produce more startups in the community. It’ll hopefully produce more jobs and hopefully will produce more tax revenue.”

On Kickstarter alone, successfully funded projects listed by Augusta residents range from launching music albums to helping convert a camping trailer into a mobile clothing boutique.

Nicolet said she and her husband, a Marine, have backed multiple projects, mostly food-related, on Kickstarter.

“It’s just really neat to see what people come up with,” she said. “It gives people a chance to actually get their stuff out there without having to hire a lawyer or promoters and trying to find room on a store shelf before anybody ever sees it.”

One of the most valuable advantages of crowd funding, Robinson said, is to raise awareness about an idea.

“For every dollar you spend in technology, you spend about $3 in marketing,” he said. “That marketing is worth its weight in gold.”

Christopher Hanks, the director of the entrepreneurship program at the University of Georgia’s Terry College of Business, agreed with Robinson that crowd funding has obvious advantages, such as providing an extra lending source and increased publicity.

But the method can prove burdensome, he said, with the potential for a high number of investors. It also can ignore business models, setting up owners for failure, Hanks said.

“It’s a minority compared to all the other ways that you raise money for a business,” Hanks said. “It’s just one more tool in your toolbox to get the funds that you need to create the business that you want.”

With the money garnered online, Nicolet said she plans to pay for her business license and other permitting fees.

“I really shouldn’t have to pay too much out of pocket to get this idea going,” she said. “If I can get really good feedback from the people that I send the rewards to, hopefully they’ll like it so much that it’ll be worth my time and effort to take it and try to mass produce it.”

WHAT IS CROWD FUNDING

Georgia Regents University professor Dr. Anthony Robinson breaks down crowd funding to the three P’s:

Project: The initial idea

Participants: Individuals who invest in the project, often in varying degrees

Platform: The online outlet where an idea is promoted, such as Kickstarter, Indiegogo and GoFundMe

CROWD-FUNDING TIPS

The National Federation of Independent Business provides tips for raising funds via crowd funding:

First, reach out to your network of friends and family.

Share your personal story and explain why your project is important.

Support your claims by use of video or other factual information.

Get a head start by showing investors you’ve made progress on an idea.